NYT Paywall Working Better Than People Expected, But That Doesn't Mean It's Working

from the treading-water dept

Over the past few days, there's been a lot of talk about the NY Times "paywall" and whether or not it's "working." It was kicked off by a Bloomberg piece arguing that things were going amazingly well with the paywall, proving the doubters wrong. I've actually had a surprising number of people contact me about that article, asking for my take on it -- so let's make a couple of upfront statements and then explore it:

First off, I agree that the performance of the NY Times paywall greatly exceeded my own expectations for it. I was quite harsh in predicting it would be a complete flop. I was wrong. It wasn't a flop. I explore why below.

That said, I don't think that it's been nearly as big a "success" as some are making it out to be, and I still think that it wasn't the best play that the NYT could have or should have made -- and it's doubtful that anyone else following in the NYT's footsteps would find similar results. And that's a pretty big problem, because even if you think the NYT's paywall should be judged a "success" it doesn't change the fact that its revenue continues to drop (and not just its print revenue -- digital revenue is struggling too). Perhaps the paywall may have limited the revenue collapse, but it has done little to create a new and sustainable business model.

Separately, it should be noted that the success "numbers" are based on an outside estimate from an analyst, and could be wildly off-base (in either direction). So, some grain of salt should be taken with the claims that the paywall made as much as it did. Now, let's do a bit of exploration.

Why has the paywall done better than expected:

It's not really a paywall! This was a point we realized soon after the details were released, when it became clear that the paywall was so porous that no one would ever have to pay. Ever. As we noted, it's really the Emperor's New Paywall, in that it's completely invisible. If you don't want to pay, you just don't use javascript, or you remove the text after the ? at the end of the URL, or you open another browser, or you delete your cookies, or one of the half dozen or so other tricks that means you'll never ever face the paywall. In effect, the NYT's paywall is a donation system made to look like a paywall -- sort of like some museums with their "recommended donations" at the entrance. You never actually have to pay, but many people do out of convenience.

They don't count links/earned media: This one is big. Since so much traffic comes via links these days, one of the major problems with paywalls is that they hurt this kind of traffic. For example, we try not to link to paywalled sites whenever possible -- but we will link to the NY Times, knowing that they let in any linked traffic, and it doesn't count against your "paywall meter." That at least meant that they weren't killing off important new sources of traffic, unlike many (if not most) other paywalls out there.

The NY Times smartly figured out a way to get a ton of people signed up for free, to boost their early numbers. They did an ad deal with Lincoln, such that right as the paywall launched, anyone could get a free subscription by test driving a Lincoln. Who knows how many people actually took this up, but it bootstrapped the early numbers, and now everyone completely forgets about this (seriously, it's difficult to find any article that mentions this point any more).

In the end, it appears that the NY Times is a paper that many people think is indispensable, and because they haven't bothered to look around and find out that you never actually have to pay, a lot of people have just paid up for the hell of it.

And... for why this still wasn't a particularly smart solution or the best possible move for the NY Times to make:

As mentioned, overall results still suck. That's a pretty big deal. While the article claims that new subscriptions have finally started to outpace ad revenue declines, it seems unlikely that this will continue.

Proponents of paywalls insist that one key reason for a paywall is that it allows newspapers to charge advertisers more, since they better know their audience and can charge advertisers higher rates. It turns out that this is hogwash, and the NY Times has admitted that the paywall has had no impact on the rates they can charge for advertisements.

And part of that may be because advertisers often tend to value scale and "mindshare" over targeting. Sure, they all claim to want premium audiences backed by data, but having dealt with way too many advertisers in my life, they always always always eventually go back to the scale question. And a paywall -- even a fake one like the NYT's -- tends to limit your ability to scale.

And then there's my biggest issue in all of this. It's been entirely based on fooling users into thinking they need to pay, but not about adding more value for the users. As we've argued for years, there are plenty of opportunities to get users to pay, but it has to be about adding additional value beyond the content. It's why we've done things like providing additional scarce value for folks who choose to pay us. We don't block our content with a paywall, but we give people reasons to buy that provide them extra value (and feel free to do so, if you'd like).

Here's the crux of it: A solution based on giving people the same thing for a new, higher price only opens you up to disruption. A solution based on providing more value for your users that keeps them loyal to you is going to last a lot longer. The NY Times is, at the very least, in a unique position, in that many believe it provides coverage that can't be matched elsewhere. So they pay. But that's hard to say about almost any other newspaper (and for many, it's not even true of the NYT). We've been hearing more and more reports about other newspapers rushing into the paywall fold, only to find that almost no one signs up, and then they're left dealing with the aftermath of locked up content that only a few dozen people read. That's a disaster.

There are ways forward, but newspapers have to get beyond thinking there are only two choices: advertising and paywalls. The NY Times paywall has been more successful than many of us expected, but that hardly means it qualifies as a true "success story."

Hmm... Tell me again that PIRATES WILL PAY, but others won't?

Now, JUST TODAY you did a bit on the Minecraft crap-umentary where you said it's available FREE but you say you happily paid and so did at least one apparent fanboy. -- Now, where does your reasoning and reasons differ for a newspaper?

Here? "The NY Times is, at the very least, in a unique position, in that many believe it provides coverage that can't be matched elsewhere." -- Nah, Minecraft is unique too, and even better, it's totally discretionary income to waste time; a newspaper might have some utility.

'The NY Times paywall has been more successful than many of us expected, but that hardly means it qualifies as a true "success story."' -- Yeah, well, contrary examples abound. Try to quit claiming every pop culture anomaly means that you can run the movie industry without copyright or some level of enforcement. That's probably all anyone reasonable would ask of you: QUIT MIXING UP CUCUMBERS AND PEACHES, they're just not at all the same. -- Of course, if you did quit doing that, then you're basically out of claims.

That said, I don't think that it's been nearly as big a "success" as some are making it out to be, and I still think that it wasn't the best play that the NYT could have or should have made -- and it's doubtful that anyone else following in the NYT's footsteps would find similar results. And that's a pretty big problem, because even if you think the NYT's paywall should be judged a "success" it doesn't change the fact that its revenue continues to drop (and not just its print revenue -- digital revenue is struggling too). Perhaps the paywall may have limited the revenue collapse, but it has done little to create a new and sustainable business model.

YES!!! Precisely!

NOW

Could you please apply this same razor-sharp logic to all your admonitions to musicians to be more like Trent Reznor, or Radiohead, or Amanda Palmer, or anybody else that would be considered an equivalent "institution" of the music industry?

I will give some suggestion to the NYT, yes me the AC(Anonymous Coward) from nowhere.

- Look at Graiglist, the Apple Store, the Google Play, and other places they all have something in common, they are not the product they are the platform where other sell products, shift the paradigm, instead of being a news product be a news platform where people can also sell things and implement rudimentary social network aspects.

- Being a platform you can charge reporters, readers, sellers, advertisers and others. Reporters would work to get read and paid by readers and advertisers who want their ads in their pages and the NYT would of course charge an administrative fee for it, the NYT also could offer "professional" assistance to wanna-be-reporters, like proof-reading, editorial seal of approval which would mean it was approved by one person that the NYT trust as a manager and so forth.

- Create a true micro payment system that will be about charging transactions groups instead of individual transactions, like people pay a penny for each article but it only gets paid out if it reaches a total of 1000 pennies or $10 dollars than you apply an administrative fee, say 2%~5%, Of course there are problems with micro payments, it must be transparent to the user so it must be something akin to a gasoline tank that people just need to refill and you can use that "gasoline" anywhere, that system doesn't exist the thing closest to it is Adsense from Google.

- Maybe the NYT should experiment with crowd sourcing journalism where people pay in advance to see some stories written, let the reporters pitch their stories to the public and see if the public want to fund those stories and then charge everyone, the reporter, the readers and advertisers once it is published. Kickstarter is doing well, why not implement a good idea in other areas?

It sound simple doesn't it, and it is, the problem is in the implementation.

Re:

Could you please apply this same razor-sharp logic to all your admonitions to musicians to be more like Trent Reznor, or Radiohead, or Amanda Palmer, or anybody else that would be considered an equivalent "institution" of the music industry?

I've never said that musicians should *copy* any of those artists, or do what they did. I've only talked about *why* those artists were successful and which parts others could make use of -- which rarely involved doing the same thing. Specifically, I've DIRECTLY stated that you shouldn't just do what those artists did, but rather understand that connecting with your fans and then finding WHAT WORKS between each artist and each fan is the best path forward.

Re:

ps: In a penny economy 100,000 views would equate to $1000. Some blogs have posts that have millions of views on just that one article, which would mean $10,000 dollars.

Of course this is all conjecture at this point, there is no micro-payment system in existence and people will not pay for multiple accounts everywhere where they need to refill more than 3 tanks.

I guess the real problem is that there is no real payment system available on the internet to monetize the system from the consumer perspective, it is all to complicated, to messy and that is probably why business for the NYT of the world is so difficult right now.

On the internet a $1 is a lot of money, this is not the corner street, this is not a shop with limited editions, this is the superhighway of information where people are flooded with it and they wouldn't be able to pay for all of it even if they wanted too, with prices above $1, that is premium on the internet.

Re:

I guess Masnick thinks that since his employer Google's revenues are 96% from advertising, then everyone else's should be too.

Mistake number one: I'm not employed by Google.
Mistake number two: I don't think advertising is a very good business model. In fact, my argument is that sites like the NYTimes should be looking for OTHER business models, that are neither paywalls nor advertising. Which I said at the end, but in your rush to act silly, you clearly didn't read that far.

Mike doesn't seem to realize that people can't stand annoying ads, especially on the web and on their phones, and that people feel their lives are already over-saturated with advertising.

Actually, I agree with those statements. I think ads tend to be terrible, and it's a bad business model for most companies to rely on ads. I agree that ads are over saturating most people's lives and that there is massive ad blindness going on. Personally, I think relying on advertising as a business model is stupid.

so basically it sounds like they've moved into the AOL business model of collecting money from those too old or too dumb to know that they don't need to pay, combined with it actually being free for anyone who'd like to take any minimal effort.

that's sure to end well, any day now AOL stock will bounce back, you'll see.

Re:

Considering the amount of success Kickstarter has had since its beginning, chances are that the success will continue once crowdfunding goes mainstream. If I were Radiohead, my next experiment would be to make an album, gather the profits I think I deserve from Kickstarter and release it into the public domain while walking away with the appropriate profit.

If Kickstarter was going to eat itself it would have done so by now. "Eating itself" is not a new criticism - they said the same thing about Ebay with the horror stories in regards to scams there. Now they have consumer feedback, and an overall sense that people can trust the service and the legal protection if they fall victim of fraud. Crowdfunding will go the same way.

Speaking of paywalls, today I was on a website by a journalist I follow, and on his blog I clicked a link to a review of a book he wrote that was on The Sunday Times website. Only the first few lines were shown with the last couple fading away as if just to rub it in even more. It said that if I wanted the rest I would have to pay for a subscription.

Raging, I started thinking of all the ways I could get around it - asking around to see if someone with a subscription could just hit copy/paste for me, modding the JavaScript, modding the link, proxies, etc...

...and then I went back to the author's site itself and found that the huge blocks of text that I scrolled down to find the "link to the full article on TST" was actually a copy of the article itself.

Re:

I mean, paywalls on newspapers.. how dumb do you have to be? What next? Billboards at train stations saying "If you leave your paper behind on the train you are littering... littering the world with your Commie ideas about letting other people taking those papers and not paying for them that is! That makes you no different than thieving internet pirates! And terrorists!"

And... a typical article has 30Kb. A piece of data so ridiculously disposable and easy to copy.. I mean.. fucking .txt files for fucking fucks sake. We know what we need now, don't we? DRM for .txt files. DRM... for fucking .txt files.

There comes a point where it satirises itself and you are wasting your time talking about it.

Pay wall

The nyt is valuable to many and indispensable to some. The money that used to pay for that has been shifted away from the company. So now nyt needs to find a new way to pay the bills.
I really can't see why the traffic is such an obsession if it gives nyt no money? In fact it is just a cost measure.
Personally I hope they find a solid base. It certainly looks like that is most likely in charging for the content.

Sure, I was wrong last time... but im better now !!! (but still wrong).

was quite harsh in predicting it would be a complete flop. I was wrong. It wasn't a flop. I explore why below.

That's SO funny,

"I could NOT predict what was going to happen to the pay wall, so I will now tell you how it is not going as well as I said it was going to go, except I was wrong (completely) then, but believe me now!!!"

hindsight is an amazing thing, you need to see if you can buy some somewhere Masnick..

at least your good for a laugh.

Separately, it should be noted that the success "numbers" are based on an outside estimate from an analyst, and could be wildly off-base (in either direction).

and what again are you 'estimates' based on Masnick, hearsay ?? hindsight ?

or is it because you consider yourself an Analyst ?

either way, why (if you got it so wrong last time) can we expect you to get it any better now, even when the 'results' have come in..

BTW: how is your own pay wall going ?

why should we listen to anything you say, when it is clear you do not have your finger anywhere near anything you could remotely call a pulse ?

('Sure, I am really, really wrong, and don't have a clue, but if I say enough words hopefully that FACT will be lost in the noise')

So a paper has to be printed, paper and has to be bought, machines must be maintained, rents have to be paid, papers have to be shipped, paperboys must be paid... and somehow I can get a paper in my mailbox for what? A dollar a day? How much of that money has ever been "profit"? I always suspected it was "little to none", and that the profit actually came from the advertising - and as such the change to digital shouldn't be a problem: you get 1 dollar less for the paper, you pay one dollar less to print and distribute it.

You know, after looking at the chart in Steve Buttry's article, it sort of reinforces this creeping suspicion that I've had for a while:

Newspapers aren't in decline due to freeloading readers, but rather the newspapers' complete and total failure to collect payment from the advertisers. Somewhere along the line, the corporations seem to have said "online advertising is worth less than print advertising" and the papers just went slumped down and said "ok..."

As a result, it's now the readers who are expected to pick up the slack, to pay the full price, despite the fact that the papers no longer have printing and distribution costs. (Sounds like pay-per-view, and buying games as digital downloads, doesn't it?)

Re: Re:

Kickstarter has had more than it's fair share of failures.

you just don't get to hear about too many of them because you (I guess) only read Masnicks biased opinions.

even masnick relents and tell us about some of the epic failures they have had, and why they have had to modify their procedures to try to reduce the high failure rate, and the many failures to meet expectations.

Re:

So a paper has to be printed, paper and has to be bought, machines must be maintained, rents have to be paid, papers have to be shipped, paperboys must be paid

so net have to build servers, run network cables, establish ISP, purchase computers, purchase software, purchase 'readers', supply power to all the above, and create all the other infrastructure you need, that simple PAPER does not..

Ditto. Further, I used to pay for an annual subscription to NYT Crossword Puzzles and I let that lapse because it really annoyed me that I was already paying NYT a substantial sum (~$60/yr) for that privilege and felt that I should have had free access to the rest.

Re: Re: Re:

darryl, darryl, darryl... even mosquitoes produce coherent buzzing than the garbage you put out as theses and arguments. Now why don't you wander into that great Australian desert and go die in a fire somewhere?

Finally Turning the Corner on Technocommunism

I used to have to struggle to answer this sort of technocommunism from Mike Masnick alone in these comments, or on my little blog, all by myself.

But now, there are plenty of others to point out how backward his collectivism is, and the high-traffic Pando Daily explains why it's completely retrograde to be whining about paid content in the age of tablets:

Yes, we are finally turning the corner on that silly Web 2.0 technocommunism stuff, I couldn't be happy! I pay for a NYT subscription to read on the web or on my phone, works great, they have bills to pay for their real journalism, and they certainly shouldn't get caught up in silly collectivist fads like "crowdsourcing" stories and expecting the mob to pay for their investigations that aren't going to always please the flashmobbers.

Help, help, I'm being repressed.

I'm disappointed at the number of negative comments that were flagged by the community. I thought this readership better than to object to every Nelson-like 'HA-HA' hurled Mike's way. You had to expect crowing from the haters when Mike started the story by admitting he was wrong. He's allowed to be wrong and haters are going to hate. They all don't need to be voted down, because I'd guess Mike to be tough enough to endure a few asinine remarks. Most of those voted down weren't that offensive, vulgar or egregious, merely juvenile. Perhaps the bar repressing comments should be raised or suspended on this type of honest reporting.

Response to: Anonymous Coward on Dec 26th, 2012 @ 4:50pm

As a professional journalist, I can say first hand that there is nothing in this world or the next that will convince me to pay a newspaper to print my work. I'm insulted when they "generously" offer to use my work free of charge.

There are a few crowd sourced journalism outfits around, but I can't recall their names and I doubt you'd have heard them anyway, because they aren't successful.

They're nice ideas on paper, but they just wouldn't work in any real world capacity.

NYT's Paywall

As somebody who regularly read several news sites I am in favor of a pay wall but with a significant change. My home town paper Denver to which I subscribe, uses NYT feeds liberally and I assume I am paying for them with my subscription -- so why should I pay again at the NYT? So why not have a common subscription service that encompasses many papers. Say $100 per year gets me access to everything, not just the NYT.

Re: Re: Re:

The Paywall Appears to Have Been Altered

As of 5pm eastern time today, the workaround for deleting everything after ? in the URL appears to have disabled. I've gone as far as deleting my IE cache and the Flash Player cache. Neither one of these workarounds appears to be working either (I'm not sure how they know how many articles I've viewed, but they're caching data somehow).

Found your page while searching to see if anyone else found this out yet.

You want I hate more than the cowards that have their heads stuck up the media companies asses? Websites that feel it necessary to slap you with annoying popup ads that are designed to annoy the FUCK out of people, and encourage false clicks.

And that link leads right to a site that repeats the info already stated here, word-for-word, which is less than useful; and the ad situation makes it a NO CLICK ZONE.